Solvency condition for private bonded warehouse licence upheld as a reasonable restriction under Rule 140 and Article 19(1)(g).

Rule 140 of the Central Excise Rules, 1944 was construed as giving the Collector wide discretion, when licensing a private bonded warehouse, to insist on a bond with surety or sufficient security on conditions he approves. On that basis, the requirement that the applicant be solvent and produce a solvency certificate was held within the rule-making power. The Court also held that the condition was not an unreasonable restriction on Article 19(1)(g), because it did not mandate immovable property and allowed the officer to assess solvency and financial standing case by case. The solvency condition was therefore upheld.

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Issues: Whether Rule 140 of the Central Excise Rules, 1944 empowered the Collector to insist that the applicant for a private bonded warehouse be solvent and produce a solvency certificate, and whether the resulting notification imposed an unreasonable restriction infringing Article 19(1)(g) of the Constitution of India.

Analysis: Rule 140 authorises the Collector, while licensing private warehouses, to require a bond with such surety or sufficient security in such amount and under such conditions as he approves. The Court held that this language is wide enough to permit a condition that the trader himself be solvent and furnish proof of solvency. The earlier decision relied on by the petitioner was distinguished because the notification considered there did not expressly require the obligor's solvency. The Court further held that the condition was not unreasonable, since the notification did not insist on immovable property and the officer had to assess solvency and financial standing on the facts of each case.

Conclusion: The Collector was competent to impose the solvency condition, and the notification did not violate Article 19(1)(g).

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